{"title":"Fiscal and Environmental Sustainability: Is Public Debt Environmentally Friendly?","authors":"","doi":"10.1007/s10640-024-00847-0","DOIUrl":null,"url":null,"abstract":"<h3>Abstract</h3> <p>This article assesses the dilemma that most governments face when seeking to ensure the sustainability of their public finances through economic growth while simultaneously protecting the environment. We propose a growth model in which the government finances abatement-spending through taxation or public debt and which follows a fiscal rule that targets the long-run debt-to-GDP ratio. We show that there is a threshold for the debt ratio below which debt and environmental sustainability are secured. In steady state, the debt ratio exerts a nonlinear effect on environmental quality in the form of an inverted U-shaped curve, and the environmental tax is good for the environment when public debt is not. A fiscal rule authorizing a small but strictly positive debt ratio could help the government to implement adaptation policies for environmental protection while supporting long-run economic growth.</p>","PeriodicalId":501498,"journal":{"name":"Environmental and Resource Economics","volume":"22 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Environmental and Resource Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s10640-024-00847-0","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
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Abstract
This article assesses the dilemma that most governments face when seeking to ensure the sustainability of their public finances through economic growth while simultaneously protecting the environment. We propose a growth model in which the government finances abatement-spending through taxation or public debt and which follows a fiscal rule that targets the long-run debt-to-GDP ratio. We show that there is a threshold for the debt ratio below which debt and environmental sustainability are secured. In steady state, the debt ratio exerts a nonlinear effect on environmental quality in the form of an inverted U-shaped curve, and the environmental tax is good for the environment when public debt is not. A fiscal rule authorizing a small but strictly positive debt ratio could help the government to implement adaptation policies for environmental protection while supporting long-run economic growth.
摘要 本文评估了大多数政府在寻求通过经济增长确保公共财政可持续性的同时保护环境时所面临的两难境地。我们提出了一个增长模型，在该模型中，政府通过税收或公共债务为削减开支提供资金，并遵循以长期债务与国内生产总值之比为目标的财政规则。我们的研究表明，债务比率存在一个临界点，低于该临界点，债务和环境可持续性都将得到保障。在稳定状态下，债务比率以倒 U 型曲线的形式对环境质量产生非线性影响，当公共债务不利于环境时，环境税对环境有利。授权较小但严格为正的债务比率的财政规则可以帮助政府在支持长期经济增长的同时，实施适应环境保护的政策。
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